Negotiable Outline no probs

Negotiable Outline no probs - NEGOTIABLES OUTLINE: I. Types...

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NEGOTIABLES OUTLINE: I. Types of Payment Instruments: 3-104: a. Promissory Note —written promise to pay money i. Applicable Sections: 1. Negotiable Instrument: 3-104(e) 2. Definition of Promise: Old 3-103(a)(9); new 3-103(a)(12) ii. More than a mere acknowledgement/I.O.U of obligation to pay. To enforce I.O.U., use simple K law, not Article III [see 3-103 official comment #3]. iii. Two Parties: 1. 2. payee—can only be one; takes at first issuance from maker; no code definition iv. Different Types of Notes; 1. Certificate of Deposit: a. 3-104(j); Bank is the maker and promises to pay you back money at a certain date at a certain interest rate b. Draft —written order for one person to pay another. i. Applicable Sections: 1. Negotiable Instrument: 3-104(e) 2. Definition of Order: old 3-103(a)(6); new 3-103(a)(8) ii. More than a mere authorization to pay (need instruction to pay as well) iii. Three Parties: 1. drawer who orders payment—old 3-103(a)(3); new 3- 103(a)(5) 2. drawee who is ordered to make payment—old 3-103(a)(2); new 3-103(a)(4) a. If bank is drawee, it is also referred to as the “payor bank” under 4-105(3) 3. payee—can only be one; takes at first issuance from drawer; no code definition iv. Different Types of Drafts: 1. Check; 3-104(f) 2. Cashier’s Check a. 3-104(g); Drawer and drawee are same bank, more credible way to pay someone b. Remiter may factor in; old 3-103(11), new 3-103(a) (15): person who purchases instrument from issuer & instrument is payable to identified person other than purchaser; want to put their name on memo line of draft to keep them in loop of transaction 3. Teller’s Check a. 3-104(h); Draft drawn by a bank on another bank 1
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b. Can only fill out if you work for bank c. Postal $ order subject to federal law, not article III (3-104 official comment #4). 4. Traveler’s Check a. 3-104(i) b. Instrument is (i) payable on demand (ii) drawn on or payable through bank (iii) designated by term “traveler’s check” (iv) requires countersignature for payment by person whose specimen signature is on instrument. c. Defenses if stolen/forged counter-signature: 3-106 official comment #2 d. Countersignature isn’t indorsement 3-204 official comment #1; no indorser’s liability for signer. Also, signature is not a “necessary indorsement” as it is not even an indorsement [i.e., if forged, doesn’t prevent recipient from obtaining HDC status]. v. Payment Times for Drafts: 1. Sight/Demand Draft: a. Drawee pays when he sees it (when payee presents); payable immediately; 3-108(a) 2. Time Draft: a. Payable at certain time/on certain date; 3-108(b) II. Definition of Negotiable Instrument/Requirements: a. Preliminary Notes: i. All below requirements must be met for Article III to apply 1. Exception: 3-104 Comment #2 ; court may apply Article III by analogy (but lawyer must make the argument) ii. Make determination of whether writing is a Negotiable Instrument at issuance
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Negotiable Outline no probs - NEGOTIABLES OUTLINE: I. Types...

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